Algeria’s banking association halted trade with Spain as of Thursday after the Spanish government sided with Morocco in a dispute over Western Sahara.
Banking transfers for imports from or exports to Spain are now prohibited.
However, natural gas imports would not be affected, Algerian President Abdelmadjid Tebboune said in a statement.
Algeria is the most important exporter of natural gas to Spain.
Spanish Foreign Minister José Manuel Albares on Thursday, confirmed that gas deliveries would not be affected by Algeria’s decision.
Speaking to reporters in Madrid, he said the government was planning to analyse the impact of the measure and then give a calm, constructive and firm response.
Earlier, government spokesperson Félix Bolaños had expressed confidence that relations with Algeria would soon be restored through all diplomatic means.
Spain had agreed in March that Western Sahara can be an autonomous province under Moroccan sovereignty, as desired by Morocco.
Madrid also announced shortly afterwards that relations with Morocco were entering a “new phase,’’ building on mutual respect and securing the stability and territorial integrity of both countries.
Western Sahara was a Spanish colony until 1975.
When Spain pulled out, Morocco annexed part of the territory and has since controlled significant areas of the region, which was sparsely populated but rich in natural resources.
However, the Frente Polisario movement, supported by Algeria, is in favour of establishing Western Sahara as an independent state.
The movement frequently clashes with Moroccan troops.
Morocco’s sovereignty over the area has not been internationally acknowledged.
Spain’s decision also prompted Algeria to suspend a 20-year-old friendship agreement.
The Algerian presidential office said that Spain’s decision was contributing to the deterioration of the situation in Western Sahara and the region as a whole.